Financial institutions had loaned out Nu 147.5 billion (B) as of October 2020, which was an increase by 6 percent from December 2019, according to the monthly statistical bulletin of the Royal Monetary Authority (RMA) for January 2021.
While the tourism and service sector took a severe hit due to the Covid-19 pandemic in 2020, the agriculture sector was given a high priority in terms of access to credit with the aim of creating jobs and substituting imports.
However, the credit to the agriculture sector did not see a significant increase.
The total credit lent out to the agriculture sector increased by Nu 247 million (M) from December 2019 to October 2020, which is an increase by 6 percentage. On the other hand, credit to the tourism and service sector, which was severely affected since March last year, saw a 10.4 percent increase in the credit during the same period.
In absolute terms, the total credit to the tourism and service sector increased by Nu 3.87B.
The RMA report also shows that despite the government rolling out various credit schemes targeted to the agriculture sector in the wake of the pandemic, the share of the credit slightly decreased from 4.5 percent to 4.4 percent of the total credit during the period.
The share of credit to the tourism increased from 26.6 percent to 27.78 percent, an increase by 1.16 point percent.
A bank official said that many hotels were approved by the government before the Covid-19 pandemic and the loans were provided in 2020. He said that the growth in agriculture credit was small due to relatively smaller amounts that are availed by farmers but he said that the credit in agriculture was one of the biggest in terms of number of clients.
The government fast-tracked the implementation of 12th Plan activities and wherever possible frontloaded the investments. Amongst others, revitalising the rural economy, and creating employment opportunities were given emphasis and the focus sectors include agriculture.
With a total budget of Nu 944M, agriculture stimulus plan, the government aims to strengthen food security through domestic production while creating employment and income opportunities.
Construction was also one of the hardest hit sectors due to restrictions on the movement of materials and shortages of workers. But credit to the construction sector increased by 9.5 percent or Nu 3.525B from December 2019 to October 2020.
The construction sector is the second largest in terms of credit distribution by financial institutions.
The share of credit decreased by about 1 percent in first 10 months of last year. The total credit in the sector stood at Nu 40.685B as of October last year.